What changed in this filing

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Item 1. Financial Statements

2024-05-30 compared with 2023-11-30 · 67 added, 78 removed, 222 unchanged (40% of the section changed)

21 unchanged sentences

Current operating lease liabilities

Short-term debt

Accrued income taxes

Total current liabilities

8 unchanged sentences

47,845 , 48,324 , and 49,932 shares outstanding;

at October 28, 2023 (unaudited), January 28, 2023, and October 29, 2022 (unaudited), respectively

at May 4, 2024 (unaudited), February 3, 2024, and April 29, 2023 (unaudited), respectively

Treasury stock-common, at cost

7 unchanged sentences

13 Weeks Ended

39 Weeks Ended

(In thousands, except per share data)

34 unchanged sentences

Financing activities

Borrowings from credit facility

Repurchase of common shares

1 unchanged sentence

Purchase of treasury shares

Debt issuance costs

Net cash used in financing activities

16 unchanged sentences

Balance – April 29, 2023

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares, including excise tax

Balance – July 29, 2023

Balance – February 3, 2024

Stock-based compensation

2 unchanged sentences

Repurchase of common shares, including excise tax

Balance – October 28, 2023

See accompanying notes to consolidated financial statements.

Ulta Beauty, Inc.

Consolidated Statements of Stockholders’ Equity

Stockholders'

(In thousands)

Balance – January 29, 2022

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – April 30, 2022

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – July 30, 2022

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – October 29, 2022

Balance – May 4, 2024

See accompanying notes to consolidated financial statements.

8 unchanged sentences

and its consolidated subsidiaries.

As of October 28, 2023, the Company operated 1,374 stores across 50 states, as shown in the table below.

As of May 4, 2024, the Company operated 1,395 stores across 50 states, as shown in the table below.

New Hampshire

10 unchanged sentences

The Company’s business is subject to seasonal fluctuation, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season.

The results for the 13 and 39 weeks ended October 28, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending February 3, 2024, or for any other future interim period or for any future year.

These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 28, 2023.

The results for the 13 weeks ended May 4, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending February 1, 2025, or for any other future interim period or for any future year.

All amounts are stated in thousands, with the exception of per share amounts and number of stores.

Summary of significant accounting policies

Information regarding significant accounting policies is contained in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended January 28, 2023.

Presented below and in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” in the Annual Report.

1 unchanged sentence

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31.

The third quarter in fiscal 2023 and 2022 ended on October 28, 2023 and October 29, 2022, respectively.

The first quarter in fiscal 2024 and 2023 ended on May 4, 2024 and April 29, 2023, respectively.

Use of estimates

4 unchanged sentences

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent accounting pronouncements not yet adopted

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure.

The guidance updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance.

The ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07 on related disclosures.

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The guidance includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024 and should be applied either prospectively or retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this ASU on related disclosures.

SEC Climate-Related Disclosures

In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports.

The new rules will require disclosure of material climate-related risks, including disclosure of Board of Directors' oversight and risk management activities, the material impacts of these risks to us and the quantification of material impacts to us as a result of severe weather events and other natural conditions.

The rules also require disclosure of material greenhouse gas emissions and any material climate-related targets and goals.

The new rules will be effective for annual reporting periods beginning in fiscal year 2025, except for the greenhouse gas emissions disclosures which will be effective for annual reporting periods beginning in fiscal year 2026.

The Company is currently evaluating the impact of these new rules.

Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue.

3 unchanged sentences

13 Weeks Ended

39 Weeks Ended

(Percentage of net sales)

Haircare products and styling tools

Fragrance and bath

Accessories and other

Certain sales departments were reclassified between categories in the prior year to conform to current year presentation, including moving the bath category from Fragrance to Skincare.

Deferred revenue

Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ultamate Rewards loyalty points and unredeemed Ulta Beauty gift cards.

Deferred revenue primarily represents contract liabilities for the obligation to transfer additional goods or services to a guest for which the Company has received consideration, such as unredeemed Ulta Beauty Rewards loyalty points and unredeemed Ulta Beauty gift cards.

In addition, breakage on gift cards is recognized proportionately as redemption occurs.

The following table provides a summary of the changes included in deferred revenue during the 13 and 39 weeks ended October 28, 2023 and October 29, 2022:

13 Weeks Ended

The following table provides a summary of the changes included in deferred revenue during the 13 weeks ended May 4, 2024 and April 29, 2023:

13 Weeks Ended

6 unchanged sentences

(2) Revenue recognized in the current period related to the beginning liability .

Other amounts included in deferred revenue were $ 6,546 and $ 8,141 at October 28, 2023 and October 29, 2022, respectively.

Other amounts included in deferred revenue were $ 7,283 and $ 7,094 at May 4, 2024 and April 29, 2023, respectively.

Goodwill and other intangible assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $ 10,870 at October 28, 2023, January 28, 2023, and October 29, 2022.

No additional goodwill was recognized during the 13 and 39 weeks ended October 28, 2023.

Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $ 10,870 at May 4, 2024, February 3, 2024, and April 29, 2023.

No additional goodwill was recognized during the 13 weeks ended May 4, 2024.

The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

9 unchanged sentences

13 Weeks Ended

39 Weeks Ended

(In thousands)

6 unchanged sentences

Operating lease assets obtained in exchange for operating lease liabilities (non-cash)

(1) Excludes $ 27,682 and $ 21,347 related to cash received for tenant incentives for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

(1) Excludes $ 7,791 and $ 9,593 related to cash received for tenant incentives for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

Commitments and contingencies

1 unchanged sentence

In the opinion of management, the amount of any liability with respect to these proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On February 27, 2023, the Company entered into Amendment No.

On March 13, 2024, the Company entered into Amendment No.

3 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder;

6 unchanged sentences

Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement.

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0 % to 0.125 % or the Term Secured Overnight Financing Rate plus a margin of 1.125 % to 1.250 %, and a credit spread adjustment of 0.10 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20 % per annum.

As of October 28, 2023, the Company had $ 195,400 outstanding under the credit facility, and the weighted average interest rate was 8.21 % for the 39 weeks ended October 28, 2023.

As of January 28, 2023 and October 29, 2022, there were no borrowings outstanding under the credit facility.

As of October 28, 2023, the Company was in compliance with all terms and covenants of the Loan Agreement.

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5 % to 1.0 % or the Term Secured Overnight Financing Rate plus a margin of 1.5 % to 2.0 %, and a credit spread adjustment of 0.10 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25 % to 0.375 % per annum.

As of May 4, 2024, February 3, 2024, and April 29, 2023, there were no borrowings outstanding under the credit facility.

As of May 4, 2024, the Company was in compliance with all terms and covenants of the Loan Agreement.

Fair value measurements

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and short-term debt approximates their estimated fair values due to the short maturities of these instruments.

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates their estimated fair values due to the short maturities of these instruments.

Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:

2 unchanged sentences

● Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of October 28, 2023 , January 28, 2023 , and October 29, 2022 , there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 41,633 , $ 37,501 , and $ 34,839 , respectively.

As of May 4, 2024, February 3, 2024, and April 29, 2023, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 47,849 , $ 42,653 , and $ 40,374 , respectively.

The liabilities are categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.

14 unchanged sentences

The Company does not currently pay a regular dividend.

The Company granted 42 and 48 stock options during the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for stock options was $ 1,742 and $ 1,646 for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for stock options was $ 4,961 and $ 6,152 for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

The weighted-average grant date fair value of these stock options was $ 199.15 and $ 149.14 for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

At October 28, 2023, there was approximately $ 13,028 of unrecognized stock-based compensation expense related to unvested stock options.

There were 48 and 58 restricted stock units issued during the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for restricted stock units was $ 4,959 and $ 4,544 for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for restricted stock units was $ 14,252 and $ 13,983 for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

At October 28, 2023, there was approximately $ 32,630 of unrecognized stock-based compensation expense related to restricted stock units.

There were 33 and 37 performance-based restricted stock units issued during the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 5,237 and $ 3,489 for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 14,264 and $ 12,419 for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively.

At October 28, 2023, there was approximately $ 28,755 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

The Company granted 56 and 41 stock options during the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

Stock-based compensation expense for stock options was $ 1,680 and $ 1,470 for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

The weighted-average grant date fair value of these stock options was $ 157.66 and $ 200.67 for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

At May 4, 2024, there was approximately $ 16,803 of unrecognized stock-based compensation expense related to unvested stock options.

There were 44 and 38 restricted stock units issued during the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

Stock-based compensation expense for restricted stock units was $ 4,388 and $ 4,359 for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

At May 4, 2024, there was approximately $ 43,539 of unrecognized stock-based compensation expense related to restricted stock units.

There were 71 and 32 performance-based restricted stock units issued during the 13 weeks ended May 4, 2024 and April 29, 2023.

Stock-based compensation expense for performance-based restricted stock units was $ 4,014 and $ 3,892 for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively.

At May 4, 2024, there was approximately $ 34,998 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores.

Income tax expense of $ 80,241 for the 13 weeks ended October 28, 2023 represents an effective tax rate of 24.3 %, compared to $ 88,120 of tax expense representing an effective tax rate of 24.3 % for the 13 weeks ended October 29, 2022.

Income tax expense of $ 278,597 for the 39 weeks ended October 28, 2023 represents an effective tax rate of 23.7 %, compared to $ 289,891 of tax expense representing an effective tax rate of 24.3 % for the 39 weeks ended October 29, 2022.

The lower effective tax rate is primarily due to benefits from income tax accounting for stock-based compensation.

Income tax expense of $ 94,735 for the 13 weeks ended May 4, 2024 represents an effective tax rate of 23.2 %, compared to $ 102,367 of income tax expense representing an effective tax rate of 22.8 % for the 13 weeks ended April 29, 2023.

The higher effective tax rate is primarily due to a reduced benefit from income tax accounting for stock-based compensation.

On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduced a 15 % corporate alternative minimum tax on book income of certain large corporations and created a 1 % excise tax on net share repurchases.

The corporate alternative minimum tax will be effective in fiscal 2024 and is not expected to have a material impact on the consolidated financial statements.

The corporate alternative minimum tax is effective beginning in fiscal 2024 and did not have a

material impact on the consolidated financial statements for the 13 weeks ended May 4, 2024.

The excise tax applies to share repurchases made after December 31, 2022.

2 unchanged sentences

13 Weeks Ended

39 Weeks Ended

(In thousands, except per share data)

3 unchanged sentences

Net income per common share:

The denominator for diluted net income per common share for the 13 weeks ended October 28, 2023 and October 29, 2022 excludes 124 and 50 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 39 weeks ended October 28, 2023 and October 29, 2022 excludes 144 and 119 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 13 weeks ended May 4, 2024 and April 29, 2023 excludes 150 and 79 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.

Share repurchase program

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company may repurchase up to $ 2,000,000 of the Company’s common stock.

The 2022 Share Repurchase Program revokes the previously authorized but unused amounts from the earlier share repurchase program.

The authorized value of shares available to be repurchased under the 2022 Share Repurchase Program excludes excise tax.

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $ 2,000,000 of the Company’s common stock.

The 2022 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program.

The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In March 2024, the Board of Directors authorized a new share repurchase program (the 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $ 2,000,000 of the Company’s common stock.

The 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the 2022 Share Repurchase Program.

The 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements